The financial industry is a section of the economy that provides financial services to both commercial and retail customers. Made up of firms and institutions of all sizes, this sector includes banks, investment companies, insurance companies, and even real estate firms.
In order for any economy to remain stable and healthy, it needs to have a well-functioning financial industry. Much of the revenue generated by the financial industry comes from mortgages and loans. As rates drop, there comes more opportunity for investments and growth. More money is then poured into the finance industry, which in turn boosts the strength of the economy.
On the other hand, when the financial sector is weak, it’s bad news for the typical consumer. Because financial companies live and die on mortgages and loans, if these companies are struggling to survive, it puts a strain on small businesses and the real estate industry. But if the finance industry is booming, the economy—and the consumer—will have the assets to prove it.